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What is the relevance of Michael Porter's forces to modern day business?

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  1. Introduction
  2. Porter's five forces model
  3. Critics
  4. Conclusion

Before the early 1970s, making decisions and planning a strategy were not the same process as today. Managers who made long-term plans generally assumed that the future would lead to better times. Plans for the future were simply extensions of where the organization had been in the past. However, the energy crisis, accelerating technological changes, deregulation, increasing global competition and other environmental shocks undermined this approach to long-range planning. These changes forced managers to develop a systematic means of analyzing the environment, evaluating their organization's strengths and weaknesses, and identifying opportunities where the organization could have a competitive advantage. The value of thinking strategically began to be recognized. A strategy is the position that an organization will be able to achieve and the means to be unique in their chosen field. Each company tries to be the best in their industry and make as much profit as possible. But before establishing a strategy, several conditions have to be taken into account. In today's business environment, survival, growth and profitability are the essence goals of all industries. That's why Porter's five forces model is often being adopted as the powerful management tool of choice by many organizations. This tool allows companies to make right decisions and build and sustain competitive advantages, by taking into account five competitive forces. But, does Porter's model still apply to today's business world? In this report we are first going to present and explain Porter's model through examples, then look at the possible criticisms we can provide to this tool.

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